STATUS

The Company is limited by shares incorporated in Pakistan on December 13,

1989 under the Companies Ordinance, 1984 with an Authorized Capital of
10000000 Ordinary Shares of Rs. 10/- each i.e., Rs. 100000000/-. The Issued,
Subscribed and Paid up Capital of the Company is 3800000 Ordinary Shares of
Rs. 10/- each full paid in cash i.e., Rs. 38000000/-
Nature of Business
The Principal Business of the Company is Manufacture and Sale of Yarn and
Cloth.

Manufacturing Units
The Company has two manufacturing units, one is spinning unit and the other is
Weaving unit.
The Spinning Unit is located at District Rahim Yar Khan and the Weaving Unit is
located at District Multan in the Province of Punjab.
Offices
Head Office of the Company is located at Ist Floor, International Plaza, Bohra
Street, Multan Cantt. Sub Office is located at 35-KM, Multan-Bahawalpur Road,
Near Adda Basira, Multan. Another sub office is located in the Spinning Unit at
Rahim Yar Khan.

Auditors
M/S M. Yousuf Adil Saleem & Company, Chartered Accountants, a member of
HLB International, a world wide organization of accounting firms and business
advisers.
2nd Floor, 6-Commercial Plaza opposite Civil Hospital Abdali Road, Multan.
Financial Year
Financial Year of Company starts on Ist October and lasts till 30th September.
Bankers
Muslim Commercial Bank Limited.
Habib Bank Limited.
Askari Commercial Bank Limited.
Products
Major Products of the company are
Blended Yarn
Grey Fabric
Raw Materials
Raw materials of productions are Ginned Cotton, Polyester and Yarn.
Work Force
The Company has a total work force of 743 including skilled and unskilled.
CAPACITY
Number of Spindles installed 17280
Number of Spindles worked 17280
Number of Shifts per day 03
Number of working days 365
Installed Capacity after conversion
Into 20/s count kgs 5632450
Actual production of yarn after
conversion into 20/s count kgs 7626423
Portion of Exports
The Company exports more than 90% of the produce.

MISSION STATEMENT
To produce superior quality of Yarn by focusing on customer demand in order to
face the competition in international market and at the same time taking care of
its employees, suppliers, shareholders and society.

Purchase Department
The purchase department is divided into to two sections, cotton purchase
department and store purchase department.

STORE
PURCHASE

Cotton Purchase Department

Cotton purchase department is most important department in textile industry.
Quality of yarn depends upon cotton that has been purchased. It becomes most
important when there is business of export. There is no question of compromise
on quality. Because your minor mistake may result in huge losses. Moreover you
will loss your credibility. From director to cotton selectors all are involved in
cotton purchase process.

Purchase Process
The following steps are involved in the purchase of raw material i.e. cotton.
Visit of cotton selectors
The cotton selectors of AFT visit the cotton ginning factories. Cotton selectors
may visit the factories on their own behalf and some times the cotton factories
call them. Their visits are very important because purchase process starts from
here.
Selection of sample
Samples are selected from huge amounts of cotton. Samples are taken from
different suppliers. These samples are then tested. The most suitable sample at
lowest price is selected for Purchase of cotton.
As there is centralized management system so the Director himself takes the
decision of selection and purchase of cotton. In other words Director is final
authority in making decision.
Store Purchase Department
The store purchase department is headed by Stores Incharge. The setup of
purchase department is as under:
v Director
v Purchase Officer
v Assistant Purchase Officer
v Purchase Clerk
The store purchase department is responsible for the purchase of items like
Spare parts of machinery, store and Packing material spares, electric items, oil
and lubricants, Stationery items, Building Material, and General Store,

DOCUMENTS
· Demand Requisition.
· Invoice of Purchase
· Delivery Order
· In Gate Pass
PROCEDURE
The following is the procedure for local purchase department.
v The purchase department receives the demand requisition from store in charge
at store at mills this is in fact an intention or requirement of commodities at mill
v The purchase demand requisition contains a full detail of quality and quantity
of commodities required. It also contains price detail of goods purchased
previously
v The purchase department on the basis of indent does an inquiry for rate from at
least two suppliers from approved suppliers list.
v After inquiry Purchase Manager discusses with Director for approval of rate and
other necessary requirement.
v After the approval the Purchase Department purchases the items from suppliers
and sent them to the mill with three copies of delivery orders
v In case of no rejection of items store in charge send one copy of delivery order
back to the purchase department along with one copy of In Gate Pass. Store in
charge also keeps a copy of delivery order and in Gate Pass for his own record.
v In case of rejection of items store in charge sends all copies of Delivery Orders
with items back to the purchase department at Multan Office of AFT.
IMPORT DEPARTMENT
AFT has also an import department. The import department is responsible to
import those items, which are not available in Pakistan. The structure of this
department is as under:

Procedure
Senior Manager is responsible for import of machinery, equipment, spare parts,
raw material, etc.
· An indent for import of item after the approval of Chief Executive is sent to
import department.
· The Senior Manager Import selects a subcontractor from approved suppliers
list.
· In reply, a quotation from the subcontractor is received .A copy of quotation is
sent to concerned department for evaluation and checking of specification.
· The received items are sending to the mills where these are opened. The items
are checked against quotations. In case of any damage, the import department is
informed immediately. Import department do the necessary arrangements for
survey of goods from insurance agencies
ACCOUNTS DEPARTMENT
Accounting is the art or science of interpreting, measuring, and communicating
the results of economic activities whether you are paying your phone bill,
balancing your checkbook, preparing your income tax return or managing an
international corporation, you are working with accounting. Accounts Manager
makes the important financial decisions with consultation of Director and Chief
executive of company.
Record of all departments like import department, Export department, Purchase
and sale department, are maintained here. So this department feels a burden of
work. Accountant is very much busy person who gives instructions to six
members of finance department and checks their work time-to-time .His ten-year
experience has made the work easier for him. All types of tax rates, recent
changes in tax policies, different codes, companies’ names are on his fingertips.
The accounts department is responsible for the entire accounting process of the
organization regarding the recording of transactions, designing the accounting
policies and accounting system, preparing financial statements and computer
application. If we consider a company a cell then we can say that accounts
department has role of nucleus.
Without accounts department there is no possibility of doing business even sight
weakness’ on the part of accounts department can badly effect the performance of
whole organization.

Functions of the Department

Very first and an important function of accounting department is recording the
business transactions on vouchers. This is also called process of vouching. This is
made for internal record keeping. Auditors specifically audit vouchers. Wrong
vouching will lead to error in the system and ultimately create problems.
From vouchers information is recorded in daybook and cashbook. As each
voucher along with its invoice, DO and other necessary documents are kept in the
record room so daybook is one that can give information about parties DR and
name of account CR along with amount.
In order to see accounts in condense form ledger is used. From daybook all the
entries are posted in ledger. Ledger represents DR or CR balance of each party.
So from ledger we can see amount that is to be paid to a party or the amount that
is to be received and the balance at the end of the month.
After this all the DR balances and CR balances of all the parties are posted in trial
balance. The trial balance must be equal at both sides. Otherwise there is any
error in recording the transactions.
Now trial balance becomes the source of profit and loss and balance sheet.
This department also designs the accounting policies. All the work in this
department is being take place on accrual basis.
The department prepares trial balance at the end of every three months and
Profit and loss accounts and balance sheet are prepared at the end of year. The
financial year ends on september30 of each year. The financial statements are
presented to shareholders

The Setup of Department

The accounting department is mainly divided in to following three sections:
1. Stores section
2. Salaries and Wages Section
3. General Accounting

Store Section
Store section is mainly concerned with store accounting. This section deals with
many accounts heads that are concerned with stores. Such as stores &spare A/C,
oil and Lubricant, Packing material A/C, General Store A/C, Building Material
A/C and many others. The major responsibilities of this department are
· To record the store purchases
· To record all store issues
· To prepare various reports relating to store i.e. material consumption report,
party wise purchase report
To keep a check on all stores by surprisingly checking their record and physical
existence of items stored. Because of the above mentioned duties. This section
has a key position in the company. No payment is made to any body unless it is
checked and verified by this section.

SALARIES AND WAGES SECTION

This section is responsible of making payments to the employees. This section
plays an important role in safeguarding the interest of the company as well as
employees. This section also insures all the labor laws; certain laws relating to
company are as under:
Leave Procedure
There are three types of leaves.
Sick Leaves
Sick Leaves are eight in year
Casual Leaves
Casual Leaves are ten in each year
Annual or Earned Leaves
There are twelve earned leaves. Company’s rule doesn’t allow any employee to do
four-day leave without application. In case any employee does so then he can’t
avail annual leaves

Attendance Allowance
Leave encashment is given to those employees who save their holidays and don’t
avail them. This is given according to their per day salary multiply with number
of days of holidays not availed.
Salaries and Wages
Minimum salary is not less than Rs1950. The breakup of salary is as under
Basic Salary ________
Badli allowance 50
Cost of living Allowance 18% of basic salary
House Rent Allowance 10%of basic salary
Utility Allowance 10% of basic salary
Special Allowance 300
Income Tax
Income tax is deducted from salary of all those employees whose annual salary is
greater than Rs.40000.An entry is passed on voucher while deducting income tax
and this is paid to tax department
Advances and Loans
Advances and loans are given to the Employees on their application and are
adjusted against their salaries every month. It is the sole discretion of the
management whether they approve advances and loans are not
Gratuity
Amount of gratuity is deducted from salary of employee with passage of time and
he gets a lump sum amount at retiring time

Accounting System
Accounting System at here is centralized and on accrual basis. All accounts are
maintained in Multan head office. The process of accounting system starts from
the preparation of voucher. The following are different types of vouchers
prepared at AFT Mills:
· Journal Voucher
· Bank Voucher
· Payment Voucher
· Credit Voucher

JOURNAL VOUCHER (JV)

As accounting system is on accrual basis, so accounting entries are passed on
journal voucher at first step. This is also known adjustment voucher. This is
prepared for adjusting entry. Vouchers are prepared after every transaction.
Accounts Manager and Director verify the voucher respectively. If they have any
question they can ask relevant person if there is no enquiry then they will put
their signatures on voucher. Now it is time to record these vouchers in books of
accounts.

BANK VOUCHER (BV)

Bank voucher is used when any transaction is made with bank . Amount may be
drawn from bank and can be deposited in bank. You can receive DR advice or CR
advice from bank

DR ADVICE
When issued by bank, it means bank has deducted some amount from your
account or when has been made through your account

CR ADVICE
When issued by bank to you, it means some amount has been added in your
account .It normally takes place when some foreign remittances has been
received by bank in your account. This is usually sent by your customer in foreign
country to which exports has been made.

PAYMENT VOUCHER
This voucher is prepared at the time of making payments to any party. Party
name is debited with the amount to which payment has been made. Payment
vouchers are used for the payment up to Rs.5000. Payments more than this are
made through bank

CREDIT VOUCHER
As name of voucher represents, this voucher is prepared when some amount is
received from any party. In this case party name is credited by the amount that
has been received
IMPORTANT BOOKS
· Cash Book
· Bank Book
· Bought Day Book
· Sale Day Book

CASH BOOK
In this book cash payment and cash receipt vouchers are recorded on daily basis.
The vouchers are numbered serial wise and cash-closing balance is calculated on
daily basis.

BANK BOOK
This book is maintained for all the bank accounts of the company. When any
amount is withdrawn or deposited in the bank that amount is also recorded in the
bankbook. At the end of month bank account is reconciled with the statements of
the banks

BOUGHT DAY BOOK

The bought daybook is maintained for recording the purchases made by the
company. The balances from the bought daybook are entered in the relevant
supplier ledgers. At the end of the month the balances from the bought day book
is posted in the main ledger for control purposes

SALE DAY BOOK

In this book sale bills are entered and then posted in the customer ledger. At the
end of month balances are posted in the main ledger for control purposes.
When the transaction is properly recorded in the books of accounts then these
balances are posted in the ledgers.
The following are the types of ledgers maintained in this organization.
Main ledger
Profit &Loss Ledger
Customer Ledger
Supplier Ledger
Staff Ledger
MAIN LEDGER
It is a control ledger, which maintain all heads of accounts from which balance
sheet is prepared. All assets and liabilities accounted, profit&loss, customer,
supplier and personal Ledger are maintained in it. Posting of sub ledger is made
in main ledger on closing of month. From basic books like cashbook, bank book,
bought daybook and sale daybook. At the end of month trial balance is prepared
to check the accuracy of accounts maintained during the month by observing the
debit and credit balance as they are equal or not.

PROFIT AND LOSS LEDGER

In profit and loss ledger all accounts of income and expenses are maintained .The
following are the heads of accounts maintained in the profit and loss ledger:
· Sales Account
ü Local Sales
ü Export Sales
· Commission on sales
· Excise duty on yarn
· Export development Charges
· Manufacturing Expenses
· Administration Expenses
· Selling Expenses
· Financial Charges
· Miscellaneous Charges
MANUFACTURING EXPENSES
They are like purchase of cotton, wages and salaries, fuel and power, insurance,
repair and maintenance of plant, packing material and depreciation.

ADMINISTRATION EXPENSES
These are traveling expenses, salaries, communication expenses like fax, phone
and telex, rent, electricity, entertainment, advertising, vehicleup charges,
depreciation, printing and stationary expenses

SELLING EXPENSES
These include export expenses, corporate freight, ocean freight, trailer freight and
local selling expenses

FINANCIAL CHARGES
They are like interest on long term loan, markup on short term finances,
exchange risk coverage fee, commission on bank guarantees, letter of credit
commission, excise duty on long term and short term finances.
MISCELLANEOUS CHARGES

Miscellaneous charges include auditors fee, legal and professional charges,

donations, fines and penalties.

CUSTOMER LEDGER
It is maintained by company in which all accounts are opened to whom the
company sells yarn. Posting in customer ledger is made from cashbook,
bankbook and daybook. The balances of customers are worked out daily and the
report of receivables is prepared daily and submitted to the management.

SUPPLIER LEDGER
In supplier ledger the goods supplied by the parties is recorded. Party’s account is
credited and goods purchased are debited.

PERSONAL LEDGER
To record all transactions relating to the personal accounts of employees of the
company, this ledger is used. Advances and loans made to the employees, and the
monthly deductions from their accounts of loans are recorded.

INTERNAL AUDIT DEPARTMENT

Audit means checking the accounts prepared by others with a view to express an
opinion. An auditor is appointed to go through the accounting and other records.
Internal audit is essential for large-scale companies. It is a review of operations
and records under taken within a business by specially assigned staff. The
management can appoint staff to go through the business activities. The
suggestions given by auditors can be applied for the business benefit.
This organization has also a separate department for performing the internal
audit. The internal auditor heads this department. The audit department
develops audit program before conducting an audit. this department works on
continual basis. The internal auditor of the company visits the mill on weekly
basis and conducts the audit according to the checklist framed by the internal
audit department. The department is responsible to keeps its eyes on the
implementation of management policies. This department is also responsible to
inform the top management regarding the accuracy of all accounting information
and their analysis

Main Functions of the Internal Audit Department

Following are the main functions of internal audit department:

REVISION OF THE SYSTEM

The internal audit department revises the system if there arises any discrepancy.
CHECK ON THE SYSTEM
The internal audit department checks whether the revised system is being
followed or not, if there arises any deviation that is reported to the management.

CHECK ON THE MANAGEMENT POLICIES

This department also examines whether management policies are being followed
or not

PROPER MAINTENANCE OF BOOKS OF ACCOUNTS

The internal audit department also examines that whether books are being
properly maintained as required by the Companies Ordinance 1984.
Assets Safeguarding
This department also safeguards the company’s assets.
MAIN FUNCTIONS OF INTERNAL AUDIT DEPARTMENT AT THE HEAD
OFFICE MULTAN.
· Checking of posting from clock cards to wages sheets
· Price Checking
· Recovery of advances
· Checking of rebates and discounts
· Continuous checking of assets of the company
· Checking of Bank vouchers, Journal vouchers, Payment vouchers, Credit
vouchers
· Checking of trial balance statement after every three months.
· Checking of bank reconciliation statements every month.
· An internal auditor can check any document at any time or can ask the
accountant to provide the necessary documents.

PRODUCTION DEPARTMENT
Ahmed Fine Textile Limited Company has a Spinning Unit which is situated at
District Rahim Yar Khan. This unit is equipped with highly modern and
automated machinery. Following sections are there in their Production
Department or Spinning Unit.
PLUCKER ROOM
Now a days most of the Spinning Mills are using the Auto Plucker Plants. The
function of this plant is the breaking and opening of the bales of cotton. The
cotton in these bales is in the pressed form. It cannot be used for further
processing until and unless it is opened and made in the loose form. Firstly the
cotton bales were opened manually but in that way, so much cotton was wasted
and instead of remaining clean it became dirtier. Further more it took a lot of
time. Along with opening, the blending of different lots is done in this plant, a lot
is consisted of 100 bales of cotton. For blending the bales contain the
specifications as given below:
· Lot Number
· Station
· Kind of Cotton/Quality of Cotton
· Weight
Conditioning
Conditioning is a term, which is directed towards a task in which the opened
cotton from plucker room is placed in open form before feeding in the Blow
Room. In this way the cotton absorbs the air and automatically comes into loose
form, which is helpful in the smooth functioning of Blow Rom machines. For the
purpose of conditioning the cotton poles are allowed to lie for 12 to 16 hours.
BLOW ROOM
The main function of the Blow Room is cleaning and purifying the cotton. In
Blow Room, the raw cotton is first time processed. Input of this room is the raw
cotton while the output is the lap. In Blow Room, the Bale Breaker machines are
installed. These perform the function of breaking cotton into the loose form then
cotton is passed artificially the lighted path so that any impurity such as stones,
clots can be removed. The Bale Breaker machine contains the beaters in them
these beaters move the cotton into different ways and open it the spikes installed
on the edges help in splitting the cotton.
Distributors
These are the pipes through which the cotton is sent to Scutchers where the raw
cotton takes the shape of final product of Blow Room. Firstly, the cotton was put
into scutchers manually therefore lot of cotton was wasted but now the help of
distributors the cotton is not wasted.
Scutchers
These are the machines where output of Blow Room Lap is shaped.

Hopper Feeders
Hopper Feeders are used to regulate the flow of cotton to Scutchers. These ensure
the uniform supply of cotton to scutchers.
Krischner Beater
These are the beaters installed in scutchers. They perform the function of opening
and cleaning. They contain wooden laps and spikes which are installed on the
edge of these .

CARDING SECTION
The completed lap, which is the output of the Blow Room, is the input of the
Carding section. So, the out product is the Card Sliver. Here the laps are opened,
cleaned, drafted and short fiber is extracted from the Card Sliver. Sliver is fiber of
cotton in the shape of thick rope. Drafting in the process in which the length of
the cotton fiber is increased through automatic machine process. The lap, which
is raped on the lap rod, is placed and feeded to these machines, these machines
perform different functions to covert this lap into Sliver. The production speed of
the carding machines is 122m/m. The rollers and cylinders in these machines,
which perform these functions, include the followings:
· Feed Roller Taker in
· Cylinder Doffer
· Stripping Roller
DRAWING SECTION
Here the functions including doubling, drafting, and parallelization and
straightening are done. Doubling refers to the doubling the length of cotton fiber.
This section is divided into the two sections including the Passage 1 and Passage
2.
Drafting
In drafting the length of the fiber is increased 50% that it can be converted into
yarn/

Parallelization
In parallelization process the fibers of the sliver rope are make in the parallel
form to each other this is done along with drafting the sort fiber is extracted.

Straightening
Here the fibers are made the straight, the hooks of the fibers are removed, and all
the zigzagging is eliminated to reduce the waste.
FINISHER DRAWING
Here the input is breaker drawing sliver, the cross canning is done also in this
section as was in previous section so as to bet evenness sliver.
Pre Comber
Here the pre combing machines are used the main objectives of which are the
followings:
· Parallelization
· Removed of short fiber
· Doubling
· Straightening
· Drafting

Lap Former
Lap former is the machine, which are reserved for the formation of lap of drawn,
breaker sliver. Its main purpose is lap formation by doubling. 452 cones are used
for making one lap. In product here is breaker sliver while the out product is the
comber yarn. The lap is rapped on the plastic bobbins. Yellow bobbins are used
for the combed yarn while the Pink and green are used for the carded yarn.
Comber
Comber machines perform two basic functions:
· Parallelization
· Extraction of short fiber
SIMPLEX SECTION
Here roving machines are installed, the functions involved are twisting, and
drafting in twisting the machine twists the thread so as to make it cohesive. In
this way the string gets the strength and cannot break easily so ensuring the
smooth functioning of the machines. Here the in product is finisher-combed
sliver and out product is the Roving. The relative humidity needed is 55% to 60%.
Weight of roving package is 1.52 kg.
RING SECTION
The main function of this section is drafting and twisting, 32 ring frame has been
installed in this unit. The machinery in this section is the most expensive of all.
Main functions of the spindles are to wrap the thread bobbins and the speed
difference between speed of the spindles and of the rings is the cause of the
winding but both travels in the same direction.
There are overhead cleaners in this section they are moving overhead cleaner and
ensure the cleaning in this section they by providing the air pressure, for two
machines there are one overhead cleaner. The waste material is extracted from
the sucking pump in the plant these plants are installed on the floor.
Here the input is roving package and the output is the Yarn.
AUTO CONE SECTION
Here the yarn formed by the ring section is wrapped on cones. An important
aspect about the cone formation is that different types of thread are wrapped on
cones of different colors. Following features of Yarn are adjusted.
· Thinness of Yarn
· Thick places adjustment
· Short thick places
Here if the thread breaks it is automatically rejoined and the waste is removed
ultimately, overhead cleaners are also installed there.
CHEESE WINDING SECTION
Some companies demand doubling Yarn production so for that purpose thread
from two cones are twisted combines into one and wrapped into one cone this is
the fine output.
PACKING ROOM
It is also yarn condition room the relative humidity is 90% and is provided to the
combed yarn in this way the cotton regains the 8.5% moisture and it is the
natural. The cones are then packed and different types of packaging is used for
example for export purpose first it is packed into the polythene and then into the
cartons and the cartons contain all details about the yarn including
· Count
· Brand
· Gross Weight
· Net Weight
The final mark that is “Made in Pakistan” is placed.
TYPES OF PRODUCTION REPORTS
Different types of reports are prepared when yarn is received from the spinning
section an all records are maintained completely. These are as under:
· Yarn Report
· Waste Report
· Daily Cotton Consumption Report
· Efficiency Report (Spindles Worked)
· Daily Production Report

QUALITY CONTROL MANAGEMENT

Quality Control refers to setting certain standards for production and matching
production with those standards. Management of every company is specially
committed to the good quality both in production and end results. The
Management of AFT has been successful in creating and maintaining the quality
culture in the organization. Daily quality report is sent to headquarter and it is
checked here. Sine 90 to 95 percent of production is exported; therefore, it is
highly intensified. Following are the characteristics of the Yarn that are checked
for the equality assurance:
· Weight of Fiber
· Length and Strength
· Dia
· Weight and Final Yarn
· Evenness of Yarn
· Relative Humidity
· Temperature

MARKETING MIX
Marketing mix is the set of marketing tool that the firm uses to get its marketing
objective in the target market.
PRODUCT
AFT is dealing in the textile area, the products which the AFT is manufacturing is
the yarn and the grey fabric. AFT is producing the best quality yarn there and the
different types. The construction of the grey fabric differ due to the differ in the
quality of the yarn. There are counts.
AFT produces the yarn of different counts. From 1 count to 20 count yarn&
above, according to the specification of the customers.
AFT exports about 95% of its produce to the foreign markets. It exports to the
Europe, Asia& the other neighboring countries. Due to the spinning unit. AFT has
an advantage in the weaving, that they use their own yarn in the manufacturing
of the grey fabric also has the different quality constructions. The combed & the
carded yarn. The combed is the yarn which is more refined on compared to the
carded.
The products are produced according to the specification of the customers.
· AFT also sells & purchase the products from the local market to fulfill its orders.
· These products are building the image the progress and developments of the
organization.
PRICE
PRICING OBJECTIVES
The obvious pricing objectives, of AFT.

• Maximization of profit
• To achieve the target return and targeted sales.
• Maintain the market share.

PRICING METHOD

The pricing method AFT is adopting is profit based. The AFT policy about pricing
is that the profit should be reasonable. And also they keep in mind the
competitors because they are also providing the products at the competitive rates.

• Fixed cost
• Variable cost

The total cost is calculated. while all the expenditure related to the products
production are added. The total expenditure are divided by the production. There
the per unit is obtained, also a margin is added.

FIXED COST
· Fixed cost in value, the cost related to the machinery.
· Building cost.
· Electricity change.
· Salaries & wages
· Insurance expenses
· Plant cost.
VARIABLE COST
· Part time workers.
· Transportation charges
· Miscellaneous.
Fixed Cost + Variable Cost +Desired Profit
The profit margin depends upon the quality of the yarn and the grey fabric. As the
high quality yarn is used in the construction of the grey cloth, then the price
would be high. The price will be different to attract the customer and in local
market.
PRICE METHOD FOR THE EXPORT
Pricing method for the export products is differ from the local pricing method. In
the export, all the expenditure related to the export such as the custom clearance
charges, port clearance charges, shipping line freight and other foreign agent
commission is added. Also the charges related to the transportation and bank
handling expenditure are considered while calculating the price of the export
items.
PRICE METHOD FOR LOCAL
Pricing method for the local sale is different because all the cost involved in the
export procedures is not included. So the price would be lower in this.

PLACE/DISTRIBUTION
AFT exports about 95% of its produce.
Therefore the distribution channel of the AFT is as follows.

AFT TO CUSTOMER
AFT is also dealing directly with the customers. As in the local market and the
foreign, the buyers direct contact with the AFT. So the export department fulfill
their orders by the transformers. The transporter help in delivering the products.
The transporter are helping a lot in progressing the textile industry. The comely
delivery to the buyer is the greatest service to the customer, timely delivery is
important for the success and development of the organization.
AFT has a direct contact with the shopping his and the port and customer
clearance agents. They clear the containers from the port.

INDIRECT CHANNEL
AFT to agent & to customer. In the export of textile products, the agents are the
back bone of textile industry. They receive the order on behalf of the buyer, give
to the seller. They receive their commission form the buyer and the seller.
· The agents also purchase the products, sell them directly to other buyers. So in
this trading they earn enough profit.
· In Lahore & Karachi, there has been a large number of agents which are working
for their organizations, in foreign countries as well as in this country.
· Mostly the export business is through these agents. The agents have been
successful due to the credibility and honesty of their work.
· AFT mostly receive orders through agents, located in the Lahore and Karachi.
· AFT pays commission to them.
· Mainly the responsibilities lies on the agents in case of delayed shipments,
payment problems and the quality problems.
· Mainly the products are exported through the different shopping lines.
PROMOTION
AFT promotes its products, but to a limited extent.
· AFT provides the company brouchers to the buyers.
· AFT provides the samples of the grey fabric. The yarn to the customers.
· AFT has a direct contact with the local and the foreign agents, so they also
promote the company products.
· Visits to the customers.
· AFT marketing manager also visits its customers.
· Their high quality of the products on the fine count the Grey cloth is also
promoting the company and establishing image and goodwill.
· AFT provides the timely information to customers which helps in promoting.
EXPORT DEPARTMENT
Export department plays a vital role in any organization. AFT export department
is headed by the export manager. The export manager supervises all the
marketing & export activities. Export manager is also responsible for the
exploration of local and foreign markets. He is also making efforts for the
development and the progress of the company.
OBJECTIVES
1) To increase the Export of the Grey Fabric and yarn.
2) To maximize the company profit by increasing exports.
3) Exploration of the new markets.
4) Market research making the better information system
5) Adopting the new technological a developmental changes in the field of textile.
6) To build the image a credibility of the organization.
7) To earn foreign exchange for the progress of the economy of the country.
FUNCTIONS
Following are the main functions of the export department.
· Export department is responsible for the production planning and the
production follow up with the mill.
· Customer correspondence as well
· Export department also follow-up the local sale and purchase of the yarn and
the Grey fabric.
· The important function of the export department is to make shipment schedule
and the planning.
· Visiting to the existing and new customer.
· Providing timely information about the production of the products to the
customers which is also providing a service to its customers and promoting the
company image.
· Improving the quality of the products with a collaboration with the buyer and
the production department.
· Bank documents preparation and the follow-up.
· Preparing the custom documents
· Dealing with the agents and providing timely information to the parties.
· B/L follow-up with the shipping lines.
· Export system updation is also the responsibility of department.
· Preparing the quality analysis report and sending them to higher authorities.
· Maintaining the complete sale and purchase records
· Export department is helping in improving the quality and betterment of the
products and the company.
· Providing timely information to the clients is the main service provided by the
AFT export department.

EXPORT DOCUMENTATION
Export procedure is a very lengthy process. It involves a number of documents
required by the importer from the exporter. AFT export department carefully
handle all the steps involve in it. Because a little bit of mistake can cause a great
loss to the exporter and the importer.
i. Indent
ii. Sales contract
iii. Letter of Credit
iv. Custom documents
v. Packing list
vi. Bill of lading
vii. Bill of exchange
viii. Certificate of origin
ix. Inspection certificate
x. Form E
xi. Form M
xii. Shipping bill
INDENT
Indent is the first export document which is send by the agents to export
department. After the careful analysis of all the terms and conditions such as the
quality description the selvedge, shipment date, piece length, price per unit, the
packing and payments terms. It also contains the buyer name and the reference
number of buyer or agent.
SALES CONTRACT
The export department after the careful analysis of indent issues the sales
contract. As they have the products and in the sales contract they confirm the
terms and conditions of the indent, such as the quality, packing, payment terms,
commission, shipment date and the price of the product. Issuing sales contract is
the confirming the sale of the products to the buyer on the specified price. If there
is changing made by the buyer or agent, so the later revised sales contract is
issued by the export department. In which they can revised any thing, the
shipment schedule, the price & the product specification. Export department
handle carefully the steps of that procedure. Also the contract copies are sent to
the agent, the buyer, the accounts and the audit department of the AFT for their
record purpose.
LETTER OF CREDIT
Letter of credit is very important documents in the whole export procedure.
Because without this the process could not be complete.
L/C is a written instruction issued by buyer’s bank, authorizing the exports to
draw in accordance with the terms and stimulate legal forms that bill will be
honored.
In the L/C all the term and the conditions are given by the buyer. What
documents he needs. In the L/c there are important things mentioned there.
1. The Buyer name is there in the L/C
2. The bank of the importer is also mentioned.
3. The importer name and address is also given.
4. L/C number is mentioned on the top or the L/C
5. Issuing date of the L/c, the expiry date of the L/C, the amount of L/C, the
quantity of the products.
6. The complete description of the products and the rate.
7. The terms, either CNF or CFR,
8. The shipment date is also mentioned.
9. The port is given there in L/C.
10. The shipping line is given, so the exporter only sent the goods on that specific
shipping line.
11. L/C terms are given, either it is 120 days, 90 days or sight from B/L date
12. On the L/C the rate per unit and the shipment schedule is give on what date
the products would be shipped in what quantity.
13. Trans shipment or the partial shipment allowed or not is also there in the L/C
14. All the documents such as the invoices, the packing list, the certificate of
origin and other inspection certificate are also mentioned as required by the
importer.
TYPES OF L/C

· Irrevocable or revocable

· Documentary or clean
· Un-confirmed or confirmed
· Sight
The exporter has to fulfill the terms mentioned in the L/C. Both the importer the
exporter are bound to fulfill their obligation mentioned his L/C
TRANSPORT DOCUMENTS
The transport documents are very important because it provide the evidence that
goods have been transported and it enables the importer to receive the goods
from the custom authorities. As the order placed by the importer is ready on the
due date, the export department issues the dispatch order to the mill. That the
following quality should be dispatched on the containers specified on this L/C.
The goods are loaded on the specified containers and they are sent to the Karachi
port on the specified shipping line.
AFT mostly does its shipment through the shipping companies. The shipping
lines charge their freight and other charges are paid the agents as well as for
clearance of the goods from the port. The agents handover the documents which
involve packing list and invoices to the shipping lines.
As the trailer number, the container number E form number, quality and the
quantity is completely mentioned on this invoices.
Mode Document Carrier
By sea Bill of lading Shipping lines
By Rail Receipt Railway service
By Road Road way bill Transporters
By Air Air way bill Air lines
NEGOTIABLE DOCUMENTS
In the negotiable documents the title of the good is transferred form one person
to another when the existing holder produces the documents.

NON NEGOTIABLE
In the non-negotiable the title of the goods is non-transferable. In the exporting
of good the number of the parties one involved.
1) The firm or the company engaged in business of transporting products, such as
the track company, shipping company a airline.
2) The exporter, who is exporting the goods to the buyer.
3) The importer who is importing the goods from the seller.
BILL OF LADING
Bill of lading is one of the most important documents in the whole export
documents. Because without this the importer cannot receive their goods from
the destination port.
AFT first of all draft the bill of lading and that is sent to the shipping line. Bill of
lading also contains the specifications related to the importer and the exporter.
The name of the exporter, place, the importer, the bank, the quantity is
mentioned, the quality with all the specifications required by that, the total value
of the goods which are exported. The date of the bill of lading is mentioned. The
shipping line and vessel name is given on B/L.
B/L is a comprehensive documents that is issued by the shipping line. The date of
shipment is also mentioned on that. Without this the importer can’t clear the
goods from the destination.
AFT export department also very quick in follow up of the B/L because they have
to transfer the information to the parties.

CERTIFICATE OF ORIGIN
Certificate of origin shows that the good which are being exported are originate
from a country form which importer is allowed. These are required by the
authorities in the importing countries. In order to satisfy and support a claim for
the import duty.
This certificate of origin may also be made by the consultants of the importing
country in the form of consoler invoice or legalize the exporter’s commercial
invoice. When explorer called for L/C, of is with the other documents by
reference to the invoice number, L/C number and by quoting shipping marks and
numbers in order to identify the goods.
PACKING LIST
Packing list is a document which involves all the complete list of the goods
packed in the particular shipment. It is very important. Documents. It provides a
convenience to the shipping and the clearance authorities.

features OF PACKING LIST

1) It usually shows the marks a number mentioned on the packages.
2) It shows the weight also.
3) Each package is marked by a number.
4) It shows the contents of each package, what is nature, quality and quantity of
the package.
5) It provides a linkage with the other documents to reference to the invoice
number, date, letter of credit number, date and vessel name.
FORM-E

Form E is a document issued by the exporter bank. Through

Form-E the SBP controls the overall exports of the
 country. The form-E declares that the export
information given on the form-E are correct and will
submit the duplicate and triplicate copy of this form to
authorized bank.

Form-E contains the following important information’s.

1) Description of the goods, the quality of the goods exported.
2) The quantity of the goods.
3) The Terms of the L/C.
4) Destination of the goods.
5) The consignee bank. The importer bank name through countries the payment
would be released.
6) The Invoice value of the goods in the exported.
7) The port form where the good are shipped.
8) The place from where good are cleared.
9) Date of the form E is also on this form.
CERTIFICATE OF INSPECTION
Certificate of inspection is also a important document, it is in those consignments
where the importer wants to assure himself, about the shipment of the correct
goods, in terms of the quality, description quantity and size. The documents
should specifically identify to the goods by having a reference to the marks and
numbers of the package and linkage to the other documents by reference to
invoice number, the letter of credit number, the vessel name and the shipping
line.
BILL OF EXCHANGE
It is unconditional order in writing, addressed by a person to another, signed by
person giving it, requiring the person to when it is addressed to pay on demand
or at a fixed determinable future date. When the L/C is opened the B/E must be
strictly drawn according to the terms and conditions of the creditor may be
drown on the request of the applicant or on the bank request through which the
credit is opened. B/E is also a important document of export.
SHiPPING BILL
The customer clearing agents issue the shipping bill. It contains the complete
information about the export bank the importer name, the exporter name, the
weight of the goods, (Net and gross weight), number of packages, amount in US$,
quality of the goods, the container number, the exchange rate and rupee amount.

FORM-M
It is also an important. It is used to pay the commission to the agents. AFT
receive this from the agents. On this the amount of the commission is mentioned
against invoices.

PEST ANALYSIS
POLITICAL
Ø The government taxes and the procedures about the taxes collection also have
impact on the textile sector.
Ø Govt. rules & the regulation about the textile sectors they also influence on the
small and the large textile industries.
Ø Duty drew back is also an other, which is important.
Ø Export policies and the quota policies play a vital role in developing the future
of the textile Mill.
Ø Custom rules regulation are major factors in importing the machinery and
exporting the products, such as the Grey Fabric the Yarn.
Ø The export surcharges also have the impact on the competitiveness of the
organization.
Ø The discontinuity in the policies have the negative impact on AFT.
ECONOMIC
Ø Growth rate of the country is also important for the progressive textile
industry.
Ø Inflation rate shows the level of prices. The high rate of inflation level leading
towards the lower profit margin.
Ø Macro economy will also keep in improving the industry growth.
Ø Foreign investment is also boosting the economy.
Ø Govt. rules & regulations also have influence in the textile industry.
Ø The fiscal balance also have impact. It is reducing so the interest rate is also
decreasing.
Ø Balance of payment is also improving it is a positive indicator for the
development of textile sector.
Ø Govt. incentives to the export of textile products also play vital role.
Ø The rupee increasing so we are getting more foreign exchange.

SOCIAL
Ø Social unrest and disorder is also influencing.
Ø Work force attitude is positive which is improving the growth and development
of AFT.
Ø The culture and the social norms.

TECHNOLOGICAL
Ø Technological developments in the machinery and parts have a great impact.
Ø Internet access is other. It is improving the efficiency & the time is reducing. It
is a great facility to the exporters.
Ø Computer aided designs are also improve the overall productivity and the
efficiency. It has reduced the time cost as well.
Ø Customers quick access to the information due to the fast communication
channels.
Ø The new technological developments such as e-commerce, e-banking and
information technology are improving the efficiency and productivity.
SWOT ANALYSIS

STRENGTHS
Ø Good know how about the textile business. Which is improving the progress of
the company.
Ø Cheap labour is available to AFT which is reducing the per unit cost.
Ø The products are at compatible prices.
Ø Cotton is also available at cheaper rates.
Ø It has its own spinning unit and the weaving unit also. Which is reducing the
cost of production.
Ø AFT has well qualified staff.
Ø AFT has a good financial resources. So they can invest in other textile related
products.
Ø AFT has its better market information system.
Ø AFT has good relations with local and foreign buyers.
WEAKNESS
Ø Delivery time is more due to this the shipment are delayed.
Ø Lack of HR resources development.
Ø Lack of promotional activities. AFT should do the more effort in promotion.
Ø There is more decentralization in AFT.
Ø Less competitive in the fine count.
Ø Our cotton fiber is Short .Which is decreasing our productivity in fiber.
Ø Non-professional attitude. Which is decreasing efficiency.
Ø Per unit cost is not decreasing .So we are less competitive in count Fiber.
Ø AFT is not exporting value added products.

OPPORTUNITIES
Ø AFT has opportunity to export to the U.S.A and the Europe markets.
Ø There is more scope of exporting to these markets.
Ø Govt. is also providing lot of incentives to the exporters.
Ø The AFT can move in horizontal and the forward integration.
Ø The decreasing interest rates on the loans.
Ø AFT has opportunity to explore new international and growth oriented markets
for the exports of Fabric.
Ø AFT can play the role of agent. So they can save the commission which is paid
to the agents.
Ø AFT can better the marketing techniques.
Ø The company should import the latest technology to decrease the per unit cost
of the production.
Ø The company should go in dying process also.
Ø The company should make efforts to improve the technical skills of the labour
and employees which will improve the overall efficiency and productivity of the
organization.
THREATS
Ø Quotas are lifting AFT will face the major threat.
Ø AFT has a threat from the domestic and the international competitors.
Ø China, Thailand and Indonesia are the emerging giants in textile.
Ø WTO regime will be a great threat.
Ø The AFT will face tough competition in domestic and international markets.
Ø Political instability is also a major threat.
Ø Govt. strict policies about the textile sector.
Ø The unreliable agriculture sector.